Selectivity and the Gender Wage Gap Decomposition in the Presence of a Joint Decision Process

38 Pages Posted: 21 Jul 2008

See all articles by Marcia Schafgans

Marcia Schafgans

London School of Economics & Political Science (LSE)

Morton Stelcnery

affiliation not provided to SSRN

Date Written: December 2006

Abstract

In this paper we revisit the gender decomposition of wages in the presence of selection bias. We show that when labor market participation decisions of couples are not independent, the sample selection corrections used in the literature have been incomplete (incorrect). We derive the appropriate sample selection corrections, based on a reduced form model for the joint participation decisions of both spouses. The influence that husbands' participation decision has on the female participation decision also highlights the importance of using data on both spouses for the analysis of the gender wage gap. Taking account of these issues might influence the outcome of the decomposition analysis and affect the evidence of discrimination. We analyze its potential impact by analyzing the gender earnings differential using Canadian census data.

JEL Classification: C34, J71, D13, J31

Suggested Citation

Schafgans, Marcia and Stelcnery, Morton, Selectivity and the Gender Wage Gap Decomposition in the Presence of a Joint Decision Process (December 2006). LSE STICERD Research Paper No. EM513, Available at SSRN: https://ssrn.com/abstract=1163560

Marcia Schafgans (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Morton Stelcnery

affiliation not provided to SSRN

No Address Available

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